Multiple Choice
In macroeconomics, which definition best describes real GDP?
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10. Measuring National Output and Income
Nominal GDP and Real GDP
Multiple Choice
In macroeconomics, how do you calculate the percentage change in real GDP from year 1 to year 2?
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Verified step by step guidance1
Step 1: Understand that the percentage change in real GDP measures how much the real GDP has increased or decreased from year 1 to year 2, expressed as a percentage of the real GDP in year 1.
Step 2: Identify the real GDP values for both years: \( Real\ GDP(year\ 1) \) and \( Real\ GDP(year\ 2) \). These values are adjusted for inflation, unlike nominal GDP.
Step 3: Calculate the change in real GDP by subtracting the real GDP of year 1 from the real GDP of year 2: \( Real\ GDP(year\ 2) - Real\ GDP(year\ 1) \).
Step 4: Divide the change in real GDP by the real GDP of year 1 to find the proportionate change: \[ \frac{Real\ GDP(year\ 2) - Real\ GDP(year\ 1)}{Real\ GDP(year\ 1)} \].
Step 5: Multiply the result by 100 to convert it into a percentage: \[ \left( \frac{Real\ GDP(year\ 2) - Real\ GDP(year\ 1)}{Real\ GDP(year\ 1)} \right) \times 100\% \]. This gives the percentage change in real GDP from year 1 to year 2.
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